Hubert lives in Detroit and runs a business that sells boats. In an average year, he receives $728,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $428,000; he also pays wages and utility bills totaling $262,000. He owns his showroom; if he chooses to rent it out, he will receive $18,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Hubert does not operate this boat business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $18,000 per year rate. No other costs are incurred in running this boat business. Identify each of Hubert’s costs in the following table as either an implicit cost or an explicit cost of selling boats.   Implicit Cost Explicit Cost The wholesale cost for the boats that Hubert pays the manufacturer       The wages and utility bills that Hubert pays       The rental income Hubert could receive if he chose to rent out his showroom       The salary Hubert could earn if he worked as a paralegal         Complete the following table by determining Hubert’s accounting and economic profit of his boat business.   Profit (Dollars) Accounting Profit   Economic Profit

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Definition of economic costs

Hubert lives in Detroit and runs a business that sells boats. In an average year, he receives $728,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $428,000; he also pays wages and utility bills totaling $262,000. He owns his showroom; if he chooses to rent it out, he will receive $18,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Hubert does not operate this boat business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $18,000 per year rate. No other costs are incurred in running this boat business.
Identify each of Hubert’s costs in the following table as either an implicit cost or an explicit cost of selling boats.
 
Implicit Cost
Explicit Cost
The wholesale cost for the boats that Hubert pays the manufacturer
 
 
 
The wages and utility bills that Hubert pays
 
 
 
The rental income Hubert could receive if he chose to rent out his showroom
 
 
 
The salary Hubert could earn if he worked as a paralegal
 
 
 
 
Complete the following table by determining Hubert’s accounting and economic profit of his boat business.
 
Profit
(Dollars)
Accounting Profit
 
Economic Profit
 
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